• India’s textile industry, the country’s second-largest employment provider, requires stable access to high-quality cotton.

• In view of the persistent demand-supply gap, the government extended the import duty exemption on cotton until December 31, 2025.

• The move comes at a time when the steep 50 per cent tariffs imposed on Indian goods by the US came into effect, with America being the largest export market for the country’s textile and apparel exports.

• The decision, notified by the Central Board of Indirect Taxes and Customs, is expected to stabilise the input costs across the textile value chain, providing relief to manufacturers and consumers alike.

• The government monitors cotton prices closely and retains the flexibility to impose safeguards as and when required.

• With 95 per cent of domestic cotton consumed by the textile industry, the duty exemption is expected to indirectly benefit farmers as global competitiveness enables mills to pay better prices to cotton farmers.

• Affordable, high-quality cotton strengthens India’s position in export markets, reviving orders for small and medium enterprises as well as export-oriented units. 

• The textile-apparel value chain employs over 45 million people, and stable cotton supply is crucial to prevent job losses and encourage industry growth.

• The duty-free imports would stabilise raw material costs, strengthen global competitiveness and sustain employment in the textile-apparel value chain.

• Cotton textile exports accounted for approximately 33 per cent of India’s total textile and apparel exports during April-October 2024-25, valued at $7.08 billion, making it the second-largest contributor after readymade garments.

Cotton sector in India

• India is one of the largest producers, consumers and exporters of cotton in the world.

• Cotton is one of the most important cash crops and accounts for around 23 per cent of the total global fibre production. 

• The consumption of cotton is approximately 326 lakh bales (170 kg each) per year.

• India occupies first position in the world in cotton acreage with 113.60 lakh hectares under cotton cultivation which is around 36 per cent of the world area of 316.20 lakh hectares. 

• Approximately 62 per cent of India’s cotton is produced on rain-fed areas and 38 per cent on irrigated lands. 

• Apart from being the provider of a basic necessity of life — clothing which is next only to food — cotton is also one of the largest contributor to India’s net foreign exchange by way of exports in the form of raw cotton, intermediate products such as yarn and fabrics to ultimate finished products in the form of garments, made ups and knitwear. 

• Due to its economic importance in India, it is also termed as “white gold”.

• Cotton plays a major role in sustaining the livelihood of an estimated six million cotton farmers and 40-50 million people engaged in related activities such as cotton processing and trade. 

• India grows all four known species of cultivated cotton. They are Gossypium arboreum, G.herbaceum, G.hirsutum and G.barbadense.

• To support the cotton industry, government of India announces Minimum Support Price (MSP) for two basic staples groups — medium staple (24.5mm-25.5 mm) and long staple (29.5-30.5) cotton. 

• The Cotton Corporation of India Ltd (CCI), a Public Sector Undertaking under the Ministry of Textiles, is the nodal agency of government of India for undertaking MSP operations in the event of prevailing seed cotton (kapas) prices fall below the MSP level.